Amazon’s success as a digital retailer has won it fans in the insurance industry for its innovation and customer centric model.
But now Amazon is posing a real threat to insurers.
Amazon is currently recruiting from the insurance industry in London to join a new team looking to disrupt the insurance market in the UK, Germany, France, Italy, and Spain.
This should have insurers worried for a number of reasons.
1) People actually like Amazon
Amazon has a good reputation for putting customers’ needs first.
Amazon offers clear, transparent services. Things like tracking packages, next-day delivery, a clear returns policy, and customer reviews, provide clear communication to customers.
This level of trust and transparency is something the insurance industry has really struggled with, especially after the likes of the PPI scandal in the UK.
According to a recent GlobalData survey, 18 percent of people would buy their motor or home insurance from Amazon — before they’ve even begun marketing or offering it.
2) Amazon is already everything to everyone
Amazon has established itself as a key service provider for households.
Its Prime service, promising fast delivery as well as offering a TV channel and movie service, makes for a popular subscription model.
The insurance industry is increasingly offering a monthly subscription payment model, which would fit well with Amazon.
3) Amazon’s got the tech
Amazon’s investment in technology has brought households voice-activated speakers that use artificial intelligence.
As we move nearer to an age of smart, connected homes, Amazon is well placed to lead the way.
This will also position it well for providing insurance, as tech in the home will soon define the insurance requirements of an individual household.
This interactive relationship is a long way from the limited annual renewal or claim process traditional insurers work to.
Insurers are already playing catch up
While insurers are investing in tech and providing digital services, the majority are light years behind Amazon.
If insurers are not careful they may be pushed out of having a direct relationship with customers and be relegated to the role of a price-driven risk carrier at the back end (assuming Amazon doesn’t want to hold the risk too).